South Korea’s financial regulator, the Financial Services Commission (FSC), has submitted a proposal aimed at regulating the use of credit cards by its citizens to buy crypto. According to the document, the FSC seeks to ban any crypto transaction linked to credit card usage in the country.
This proposal comes in response to growing concerns about illegal capital outflows and potential money laundering associated with transactions on foreign crypto exchanges.
The Commission’s officials expressed concerns about the potential for illegal outflows of domestic funds due to money laundering, speculative activities, and the promotion of speculative actions.
The Financial Services Commission (FSC) is the central government body in South Korea responsible for financial policy and financial supervision of financial institutions, such as banks, insurance companies, mutual savings banks, trust business entities, investment traders or brokers, investment business entities, investment advisory business entities, and financial holding companies.
The FSC, formerly known as the Financial Supervisory Commission, was established in 1998 and is the top financial regulator in the country. It makes financial policies, directs the Financial Supervisory Service, and oversees the regulation of various financial sectors.
In recent years, the FSC has focused on regulating the crypto sector, proposing rules to protect the customers of virtual asset services providers (VASPs) under the Virtual Asset User Protection Act passed earlier this year.
These rules are scheduled to take effect on July 19, 2024, and cover various aspects such as disclosure requirements, fees, cold wallet storage, and customer protection.
Moreover, although current regulations allow domestic cryptocurrency exchanges to facilitate transactions involving verified user identities for crypto assets, these provisions do not extend to transactions conducted on international cryptocurrency exchanges.
The proposal is presently undergoing public consultation until February 13, inviting input and perspectives from stakeholders to contribute to discussions on its effective implementation.
Nations around the world are managing crypto regulations in various ways. The PwC Global Crypto Regulation Report 2023 indicates that more than 20 countries have passed comprehensive crypto regulatory frameworks over the past year.
The report also highlights that the Financial Stability Board expects national authorities to implement regulatory frameworks for digital assets comparable to those already in place for traditional finance.
In terms of specific regulations, the European Union has approved the Markets in Crypto-Assets regulation, which is a world-first package of comprehensive laws for the crypto industry. Additionally, the European Commission has proposed the Markets in Crypto-Assets Regulation (MiCA), which establishes clear crypto industry conduct and introduces new licensing requirements.
